CANADA STOCKS-TSX drops to near four-week low as Fed worries return

* TSX falls 57.77 points, or 0.46 percent, to 12,411.55
* Nine of the 10 main index sectors decline
* Valeant, Air Canada jump after results
* Athabasca gains after project approval
By John Tilak
TORONTO, Aug 7 (Reuters) - Canada's main stock index tested
a four-week low on Wednesday as concerns that the U.S. Federal
Reserve might soon begin pulling back on its stimulus program
hit shares of financial and energy companies.
Limiting the damage was a jump in the shares of Valeant
Pharmaceuticals International Inc after the company
issued an upbeat quarterly report and full-year forecast.
A top Fed official said on Tuesday that the U.S. central
bank will likely reduce its bond buying later this year, and
depending on economic data could do so as early as next month.
Recent data from the United States has been signaling
stability and growth in the world's largest economy, suggesting
to the market that a Fed stimulus wind-down could be imminent.
"Our view is that they'll begin tapering in September," said
Fergal Smith, managing market strategist at Action Economics.
"The economic data that is coming out is giving the Fed the
confidence."
"The stock market is setting up for that," he added. "For
Canada, you're starting to see some of the commodities roll over
in anticipation of September tapering."
Bullion fell to a three-week low on the Fed worries, while
oil prices slipped below $108 as concerns about supply
disruptions eased.
Investors also processed a move from the Bank of England to
keep interest rates at a record low until unemployment falls to
7 percent or below, which it views as unlikely for another three
years.
The Toronto Stock Exchange's S&P/TSX composite index
was down 57.77 points, or 0.46 percent, at 12,411.55,
after falling as low as 12,406.62, its lowest level since July
11. Nine of the 10 main sectors on the index were in the red.
Financials, the index's most heavily weighted sector, lost
0.6 percent. Royal Bank of Canada, the country's biggest
lender, gave back 0.7 percent to C$63.57 and had the biggest
negative influence on the index. Toronto-Dominion Bank
fell 0.6 percent to C$86.55.
Energy shares slipped 0.5 percent, tracking the oil price
decline. Enbridge Inc shed 1.6 percent to C$44.89, and
Suncor Energy Inc was down 0.8 percent at C$33.36.
However, Athabasca Oil Corp jumped 13.7 percent to
C$8.38 after an Alberta energy regulatory panel approved the
company's Dover oil sands project.
Shares of Air Canada shot up about 22 percent to
C$2.59 after the country's largest airline reported a nearly
three-fold jump in second-quarter operating profit as margins
improved.